Making the grade

What do we look for in a fund?

Although the Fund has a flexible approach to selection, it should be noted that there is naturally a limited amount of capital available, and that the Fund has various internal criteria which it applies in fund selection. Thus while rejection of an application may mean that the Natural Selection Fund does not believe that a good case for investment has been made, it may also be that the fund does not meet one of the technical criteria, or does not fit the investment styles currently sought by the Fund.

We therefore offer the following as a guide to the sorts of criteria which we apply. We do this only in the interests of transparency. Applicants should not artificially engineer funds to meet the criteria. In general no one criterion or preference is binding, and the Investment Committee has ample scope for flexibility.

We are looking for young, smaller funds (less than R50m AUM) who can provide an objective case for their competitive potential; part of that case must be a positive track record in managing actual money (typically we require at least a year of performance data);

In terms of style of fund, we have a preference for relatively market - neutral funds trading in liquid South African equities;

We look for fund managers who display a deep understanding of their own strengths and weaknesses, and those of their investment style.

We naturally prefer funds with a clear and intelligent approach to risk and money management;

Once our Fund Investment Committee has assessed the above factors, it makes an informed but brisk decision. Selected funds begin to receive both capital and support from Natural Selection’s holding company: Peregrine Holdings, South Africa’s premier alternative investments specialist.